What is Merchandising?

Definition: Merchandising is the marketing and promotion of a product, good, or service within a distribution chain. This distribution chain consists of merchandising companies that simply purchase and resell of products without altering or changing them. In other words, it’s a company that purchases a product from another company then turns around and resells the product to an end user without changing the product at all. The most common examples include: retailers, distributors, or wholesalers.

What Does Merchandising Mean?

What is the definition of merchandising? The general economy is typically divided into three main sectors: manufacturing, merchandising, and service based. Each one of these sectors is uniquely different and provided value to customers in different ways. The manufacturing sector makes all of the products that you and I use on a daily basis.

These businesses typically don’t sell directly to consumers. Instead, they sell to other companies that are experts in marketing and have relationships with consumers. These companies are in the merchandising sector. They merchandise the goods they purchase from the manufacturers and sell them to end users. The service sector doesn’t sell physical products at all. They simply sell services.

Let’s take a look at an example of a company in the merchandising sector.

Example

Tiffany’s boutique is a small clothing retailer that sells women’s clothes and accessories. Tiffany’s boutique buys their clothing and accessories from Jay’s Clothing, a clothing manufacturer, and resells them to customers at a markup. Tiffany’s boutique does not change or alter the items purchased Jay’s. They simply put them on displays in their storefront where customers can come purchase them.

You might ask yourself, why doesn’t Jay’s simply sell the product it makes to customers? This is a good question. Most manufacturers aren’t experts in selling product to end users and consumers, so they rely on retailers to do that for them. Some companies do, however, manufacturer and sell their own products to customers. Take Apple for example.

Another example of a merchandising sector company would be your local bookstore. That bookstore purchases their books from another company or a variety of companies. They don’t produce or manufacture their own books. They simply purchase them and resell to the public.

Summary Definition

Define Merchandising: Merchandising means to advertising and marketing of a product.